Right of Rescission: TRID 2.0 clarifies that with respect to the
Closing Disclosure, only disclose the consumer’s name and mail-
ing address under “Borrower.” The Commentary now specifically
provides that the term “consumer” is limited to parties to whom
the credit is offered or extended. While other parties to the transac-
tion may have rescission rights because they’ve offered property
as security for a loan, those rights do not create “borrower” status.
✔ ✔ Risk Management Considerations: Although not necessarily
a new concept, ensure that staff is trained to understand the
difference between a “borrower” and a party with rescission
rights only. Labeling a party with just rescission rights as
a “borrower” may infer repayment obligations
and could be deemed deceptive.
Remember that rescission provi-
sions are independent of the TRID
disclosure timing requirements.
Those with the right of rescis-
sion have three business days
to rescind the transaction,
typically starting from the
date the final Closing Dis-
closure is provided. Ensure
your closing workflows and
timelines reflect the three-
day right of rescission.
Fees and Tolerances: TRID 2.0
clarifies that for purposes of meeting the “good faith” standard, certain
charges paid to an affiliate of the creditor are
an unlimited tolerance item. These certain charges
are prepaid interest, property insurance premiums, amounts placed
in impound accounts, charges paid to a third-party service provided
selected by the consumer that were not included on the lender’s
Written List of Providers, and charges for third-party services that
are not required by the lender. Note that while subject to unlimited
tolerance standards, the above charges must be disclosed in good
faith using the best information reasonably available.
In addition, TRID 2.0 addresses the tolerance threshold for a
non-compliant Written List of Providers. TRID requires that the
providers disclosed on the written list correspond to the required
settlement services for which the consumer may shop, as disclosed
on the Loan Estimate. If you fail to provide a compliant, Written
List of Providers, fees that would have otherwise been in the “no
tolerance” category because the borrower selected their own provider, will instead fall in the 10 percent category and, potentially,
the zero percent category if paid to an affiliate.
✔ ✔ Risk Management: Regularly train staff on the importance of
disclosing fees that are legitimate, using the best information
reasonably available. Tolerance violations may trigger costly
cure provisions. In addition, failure to disclose fees and/or
disclose a compliant, Written List of Providers could be deemed
a Regulation Z violation.
Post Consummation Notices: As required pursuant to other
Regulation Z provisions, certain loans trigger a notice in connec-
tion with the cancellation of an escrow account and a disclosure
regarding the partial payment acceptance policy in a mortgage loan
transfer notice. TRID 2.0 clarifies that if such post-consummation
notices are required, they must be provided regardless of the loan
application date. Previously, the post-consummation notices were
only required for covered transactions if the application was re-
ceived on or after October 3, 2015 (TRID effective date).
✔ ✔ Risk Management Consideration: Verify that workflows
and documentation systems are updated to address the post-consummation notices for all covered loans, regardless of the
Total of Payments Tolerance: TRID 2.0 now subjects the Total
of Payments (TOP) disclosure to tolerance testing. The Total of
Payments disclosure will be considered accurate if the amount
disclosed is overstated or if the amount is understated by no more
than $100. This is the same accuracy standard used in calculating
and disclosing the finance charge.
✔ ✔ Risk Management Consideration: Ensure that you regularly
perform tolerance testing. Understatements of the TOP that
are greater than $100 violate Regulation Z and may extend the
right of rescission time period.
Numerical Rounding: TRID 2.0 provides for a new requirement
when rounding percentages. Disclosures involving a percentage
must be rounded at three decimal places, with all trailing zeroes to
the right of the decimal place dropped. So, for example, a 2.4999%
APR will be rounded to and disclosed as 2.5%, while a 7.000%
APR will be disclosed as 7%. With respect to dollar amounts,
several disclosures must be rounded to the nearest whole dollar.
And when it comes to disclosures involving a zero amount, note
that in the “final” column of the Cash to Close table, if the calculation yields a zero, that should be disclosed as a single digit—i.e.
$0, not $0.00. However, for prepaid interest in the “Other Costs”
table—if no prepaid interest will be collected at consummation,
the amount should be disclosed as “$0.00.”
✔ ✔ Risk Management Consideration: It’s a picky point, but the
rounding provisions do vary within the TRID rule and within
the Loan Estimate versus the Closing Disclosure. Ensure that
your systems are generating figures that reflect the proper
rounding requirements, and periodically audit your calculations.
Tolerance Cures and Principal Curtailments: TRID 2.0 clarifies how principal curtailments (reductions) may be disclosed,
and it allows for the disclosure of such a reduction instead of a
lender credit when providing a tolerance cure. Such principal
reductions may be disclosed in the Summaries of Transactions
table on the standard Closing Disclosure or in the Payoffs and
Payments table on the alternative Closing Disclosure. In either
case, curing the violation with a principal reduction will trigger
✔ ✔ Risk Management Consideration: There is some confusion
over whether a principal reduction should be disclosed on
line K4 or K5-7 of the Summaries of Transactions table. This
confusion stems from the fact that one regulatory provision
covers both line K4 and K5-7, and it doesn’t specify use of one